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Health Care Exchange Premiums Dip, Finally

After steep increases in 2017 and 2018, states on the exchanges see a decline of 1.5 percent

Ways and Means Chairman Kevin Brady, R-Texas, says the lower premiums are “encouraging,” but that the health care law is set up to fail over time. (Tom Williams/CQ Roll Call file photo)
Ways and Means Chairman Kevin Brady, R-Texas, says the lower premiums are “encouraging,” but that the health care law is set up to fail over time. (Tom Williams/CQ Roll Call file photo)

Health insurance premiums in the 39 states that use will fall 1.5 percent on average for the most commonly purchased plans in 2019, marking the first time that rates have dropped since the 2010 health care law was implemented.

The decline is a significant departure from steep increases in 2017 and 2018. Premiums for plans grew by an average of 37 percent for plans this year, after rising by 25 percent the year before, the Centers for Medicare and Medicaid Services said Thursday.

Last year, insurance companies raised rates because they were uncertain about the future stability of the markets created under the health care law. The administration had cut off funding for subsidies that helped some consumers afford out-of-pocket costs and insurers anticipated the effective end of a requirement for most Americans to get coverage, said Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University.

“What we’re seeing now is that these companies overshot the mark a little bit with their pricing, and so they’re kind of recalibrating now,” she said.

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Another reason why rates are dipping is that some states set up programs to subsidize high-cost enrollees. Those so-called reinsurance programs lower premiums by providing government funds to insurers to help cover the sickest enrollees.

CMS Administrator Seema Verma touted federal approval for reinsurance programs as evidence that the Trump administration was improving rather than sabotaging the market.

“Despite predictions that our actions would increase rates and destabilize the markets, the opposite has happened. The drop in benchmark plan premiums for plan year 2019 and the increased choices for Americans seeking insurance on the exchanges is proof positive that our actions are working,” Verma said in a statement. “While we are encouraged by this progress, we aren’t satisfied. Even with this reduction, average rates are still too high. If we are going to truly offer affordable, high quality healthcare, ultimately the law needs to change.”

Cynthia Cox, the Kaiser Family Foundation’s director of health reform and private insurance, said that reinsurance helped stabilize some markets and said that federal action last year to shorten the open enrollment period one year ahead of schedule also gave insurers more certainty, she said on Twitter.

Yet “things are always complicated,” she added. Most consumers receive subsidies to help them pay their premiums. Because the subsidies are tied to premium costs, people who do get subsidies may get less financial help and may want to look for cheaper plans to make the most of their subsidy.

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State-by-state impact

The biggest drop is a 26.2 percent decrease in Tennessee. A 27-year-old nonsmoker will pay $449 in average monthly premiums next year for the second-lowest-cost silver plan — the most commonly bought plan — compared to $608 in 2018.

But the decrease comes after Tennessee rates skyrocketed. Between 2017 and 2018, the average premium in Tennessee grew by 56.3 percent, according to CMS.

A handful of other states, such as New Hampshire and Pennsylvania, will also see double-digit drops.

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But some states will see another round of increases. Premiums in North Dakota will rise 20.2 percent, while rates in Delaware are increasing 16.1 percent.

Insurer participation is also improving next year. The share of counties with only one insurer is dropping from 56 percent to 39 percent, CMS said. Twenty-three more insurance companies are participating on in 2019 than in 2018, while 29 insurers are expanding.

Centene, the rare insurer that has remained bullish on the individual marketplace throughout the turmoil over the years, announced Wednesday that it is entering Pennsylvania, North Carolina, South Carolina and Tennessee. The company is also expanding its footprint in six other states.

Long-term views

Ways and Means Chairman Kevin Brady said the lower premiums are “encouraging,” but that the law is set up to fail over time.

“Our worry is that the Affordable Care Act continues to be unsustainable over time because it was designed to be unsustainable over time, from the very beginning,” the Texas Republican said recently. “So we will continue to work to provide more affordable health care to American families and small businesses.”

After Republicans in Congress fell short in their effort last year to overhaul the health care law, lawmakers and the administration took smaller steps to weaken the law and offer more types of plans that don’t meet all of the law’s requirements.

Congress effectively ended the requirement that most Americans have health insurance or pay a penalty as part of a tax overhaul. That takes effect in January.

Some experts fear that other actions the Trump administration took will hurt the market in the long run. The administration is expanding access to alternative plans that don’t have to meet consumer protections of the health care law, for example. That could lead healthy consumers to drop out of the exchanges and get skimpier coverage through those alternatives. If a significant number of consumers exit the marketplace, other consumers could see premium increases in the future.

This year’s open enrollment period runs from Nov. 1 through Dec. 15.

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